United Networks has acquired telecommunications reseller Red Telecom for $500,000 in cash, making it its sixth acquisition in 11 months.
By acquiring the telco reseller, which delivers voice and data services to 500 Australian small- to medium-sized businesses, telecommunications provider United Networks estimates an increase to annualised recurring revenue of $1.4 million.
It also expects increases to average gross profit across all services in the business at a wholesale carriage rate reduction and the streamlining of operational efficiencies, with the transaction being viewed as double digit earnings accretive.
United Networks CEO Victor Tsaccounis said in a statement lodged with the Australian Securities Exchange (ASX) that the acquisition provides the opportunity for further revenue growth.
“Our focus remains on aggressively increasing the recurring revenue of the business. We are excited by the cross selling opportunities that these acquisitions will open up for the business to grow our revenues further,” he said.
The acquisition, according to the ASX statement, represents 17 per cent growth of the telco provider’s reported FY20 earnings before interest, tax, depreciation and amortisation (EBITDA), which was an underlying $1.7 million.
Red Telecom’s acquisition also comes months after the telco reseller came under fire by the Australian Communications and Media Authority (ACMA) in January for allegedly failing to pay more than $63,000 to its customers.